Colorado Sprawl Action
Center's
Growth Management Toolkit
Table of Contents | Introduction | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11
Impact
Fees:
Problem | Solution | Applications
| Additional Resources
Problem
Perhaps the most widely held misconception about growth is that it always brings economic benefits to the community. But the reality is that poorly planned growth often brings a variety of economic burdens that are borne by taxpayers and existing residents. For example, big-box commercial developments have been proven to weaken local businesses and traditional downtown economies, resulting in a net loss of jobs and tax revenue for communities.
Residential developments on the edge of town appear cheaper only because they are often subsidized with tax dollars. For many of these new developments existing residents pay for expanded police and fire services, road expansion and maintenance, increased demand on schools, and extension of sewer and water lines.
Despite expectations of economic prosperity, many of the fastest growing cities and counties in Colorado have asked taxpayers to pay more money for schools, roads, and public services in recent years – a price tag often in the millions of dollars.
“Governments subsidize sprawl through a number of means, including taxes, zoning practices, infrastructure investment and regulations. Massive public investment in roads, highways, bridges and other traffic management practices accounts for one of the largest subsidies to sprawl.” (from LaRochelle, B., “Economic Incentives,” The Smart Growth Toolkit, Smart Growth BC, 2001)
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Sprawling and leap frog development can increase financial burdens for existing residents. |
Solution
Sprawling developments should reflect the true costs and impacts associated with those developments and should pay their own way rather than be supported by increased economic burdens on existing residents.
One of the most important tools local governments can use to address the hidden costs of sprawl is the appropriate application of impact fees to cover the expenses for the infrastructure (such as sewers and roads) and public services (such as fire and police protection) that the new development will require.
Simple formulas created by planners to calculate the projected impacts and costs of new development will generally show that developments in urban areas have less impacts and lower associated infrastructure and service costs than their far removed “greenfield" cousins on the outside of town. In short, by creating a framework whereby new developments bear the actual costs associated with those developments, opportunities in or near existing developed areas will become more attractive.
Likewise, retail projects located in town rather than at the edge where they generate increased traffic will save the community on roads and traffic mitigation expenses. Impact fees also help level the playing field between big-box developers and local merchants, the taxes from whom often are used to lure their direct big-box competitors.
| "Since local governments spend a considerable amount of money on infrastructure, and because how they choose to invest these tax dollars has a significant impact on the livability of communities, the economics of local government can be used as a key investment tool…Smart growth supporters can lobby local government to use full-cost accounting practices, so that hidden subsidies and cost are made more apparent." (From LaRochelle, B., “Economic Incentives,” The Smart Growth Toolkit, Smart Growth BC, 2001) |
Applications
Local:
Under a recent change to Colorado law, all cities and counties may now levy
impact fees. However, the new law severely restricts the existing ability
of some cities to use impact fees. Impact fees can now only be used for capital
facilities and can no longer be used for equipment, services or open space
or parks. Additionally, they are subject to a stricter legal standard than
in the past.
Impact fees allow local governments to:
1) account for and protect against the costs associated with the impacts of various forms of developments; and
2) create an incentive for developers to undertake projects within urban areas rather than in greenfields on the edge of developed areas.
Burdens on infrastructure and public services increase due to leap frog and sprawling developments. Quantifying the increased burdens on capital facilities and the monetary costs associated with these burdens creates a framework whereby decisions regarding new developments are based on the true costs associated with each potential location and type of development.
Additionally, impact fees encourage communities to reexamine the prevailing custom of providing tax incentives and subsidies for new, sprawling projects.
State:
On the state level, the legislature and governor should pass legislation granting
full impact fee authority to all local governments and encouraging that such
impact fees be applied so that existing residents do not have to continue
to subsidize new growth. With full impact fee authority, communities would
be able to decide for themselves what kinds of growth they would like to encourage
within their boundaries and to ensure that growth pays its own way. Without
this authorization many local governments lack the authority to make growth
pay its own way and no local government can reduce the burdens on schools
resulting from new developments. Expanded impact fee authority and changes
to the School Finance Act would allow local governments to increase funding
to local schools to address the impacts of new developments.
With full impact fee authority statutory cities and counties will be able to assess impact fees to address impacts associated with particular developments. In this way local governments will be enabled to reduce or end taxpayer subsidies for sprawl.
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Impact fees help reflect the true costs of a development & drive investment in urban areas. |
Additional Resources
Valeria Hart and Christopher Duerkson, eds. Development Impact Fees, Rocky Mountain Land Use Institute, Denver (1993)
www.nga.org/cda/files/072001NCDFull.pdf
"New Community Design to the Rescue: Fulfilling Another American Dream" (section
on Impact Fees) Hirschhorn and Souza, The National Governors Association
www.revenuecost.com/imp_fees.html
“Impact Fees: Practical Guide for Calculation and Implementation” By: Dennis
Ross, Fellow, ASEE, and Scott Ian Thorpe
www.mrsc.org/planning/impactpg.htm
Municipal Research and Services Center of Washington (case study in Washington
State)
Table of Contents | Introduction | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11
